Brief Muzings: Poor medium term prognosis for HP – when did it start?

Muzeable Thinking No. 12 – posted by Tim Brooks 22nd August 2013

As opposed to my usual ‘articles’ here is a genuine BLOG… brief and current – I hope!

That HP is struggling and sees limited light into 2014 might or might not surprise you. What interests me is how familiar this cycle of potential decline seems for so many legacy and especially legacy tech companies? I am quite obsessed by how businesses act at [or disastrously ignore] what I call Points of Change  and this is a good example of those moments when leadership earns its ‘cake’ or lives in the fat cat stylie. The moment when the next few steps on the journey will determine success or… the other, sadly more common, thing!

It could apply to many… but for HP the symptoms are obvious:

  • Their core market[s] is slipping away – what made them successful isn’t the answer now
  • & even within their current world they face new competitive threats from EMCs [Emerging Market Multi-National Corporations] like China’s Lenovo.
  • Outside in – they look like a Leviathan; lacking flexibility and a coherent [& visible] perspective on the world to drive their growth agenda.
  • & I hear on good authority of a history of petty divisional rivalries between Printers and PCs
  • They probably can’t remember the last disruptive/exciting thing they did.
  • Recent M&A has been… at times strategically questionable, apparently poorly executed and even hints at a bit of desperation…
  • & rest assured sponsoring Tottenham Hotspur is not going to help!!

A real expert could expand on this, but the point is that so many legacy companies find themselves wedged – rock and hard place – like this. Old gits will remember DEC [Digital Equipment Company] and their stall and dive from No. 2 in size, perhaps 1 in kudos [profit] to non-existence in a matter of a few years. They missed the Point of Change and then failed to find a meaningful response to it.

The problem for HP is that the answer might lie in the past.

Yes, Meg Whitman, current CEO, might have the ‘Canutian’ powers to turn the waves and rebuild a salient place in the world. I wish her every success. To be fair, HP have managed Points of Change before and HP’s scale means it’s decline will probably be slow and painful, so there is some time to play with. IBM’s ability to leave Mainframes behind and discover ‘services’, shows a re-incarnation, albeit as a smaller, but successful business is possible.

The HP Point of Change was probably 5 years ago. A host of disruptive changes were bedding in – the emergence of mobile and mobile internet; a rush of fundamental product developments, primarily revolutionising the UI [user interface]; the rapid global adoption and copying of it all; the resulting changes in working practices; the content rich social media/entertainment changes driving end usage/needs; the fundamental changes in data storage and its potential value etc. I could go on. But, 5 years ago – maybe 10 – the leadership of HP lacked the IMAGINATION to see or react to their possible futures. They failed to cope with the huge levels of AMBIGUITY and UNCERTAINTY that was all around them. They probably imagined, Dr Beeching-like that they were a PC/Printer manufacturer.  I’m not even feeling  too critical, Points of Change are one tough gig… but one suspects they didn’t REALLY live by the old Ad Agency/Mad Men adage – one proven to keep you honest and forward facing at ALL TIMES – that:

‘There is only one certainty in life; you will lose all your existing clients. The only uncertainty is WHEN!’

Death and taxes notwithstanding.

So whilst I wouldn’t advocate paranoia, I would suggest that any business, especially one with a hint of legacy, should [excuse the alliteration]:

  • Devote more time to thinking about the future more deeply, widely, slowly and reflectively – business model and future customer connectivity must be at the heart of this. There is discontinuity, so find and define it
  • Develop an 80/20 mind-set for activity/investment; 80 now and 20 in new stuff/models…
  • Dump 20th Century strategic planning processes – think more in terms of FLEXIBLE FRAMEWORKS, more RULES of THUMB than rules and all based on a deeper understanding of the Climate and Context you work in
  • Don’t imagine CHANGE is an INITIATIVE or PROJECT, start getting it hard-wired into the NOW – through your approach to innovation, interactions with customers & consumers and, most importantly, your staff’s performance and development [measurement]
  • Defend the medium/long term perspective by ensuring the business isn’t built [metrics et al] around the next quarter or two. It will be the headlights that your rabbit gets caught in. [Paul Polman at Unilever MUST be admired for his stand on this.]

There are no simple answers, cos if it was easy, we’d all have done it already, but if we all learn to run up hills – sometimes in the triumph of hope over experience – in search of USEFUL, USEABLE stuff we can actually USE to manage our POINTS OF CHANGE more effectively we might save a few DECs from the Corporate Mausoleum.

Exhibit 1: The future of computing…

Dec pic

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